Gold prices steady as dollar holds up on higher U.S. bond yields

(Reuters) - Gold prices were little changed early on Tuesday, with the dollar supported by higher U.S. Treasury yields and Asian stocks down amid uncertainty over tax reforms in the United States.

FUNDAMENTALS

Spot gold was nearly unchanged at $1,277.39 per ounce at 0001 GMT.

U.S. gold futures for December delivery slipped 0.1 percent to $1,277.60.

The dollar got support from higher U.S. Treasury yields in early Asian trading on Tuesday, with the dollar index , which tracks the U.S. currency against a basket of six major rivals, steady at 94.494. [USD/]

U.S. Treasury two-year note yields hit a fresh nine-year high on Monday, as the yield curve resumed its flattening and investors priced in a 25-basis-point interest rate hike by the Federal Reserve in December.

U.S. inflation expectations edged up again in October, touching their highest level in six months, according to a Federal Reserve Bank of New York survey that could spell some relief for central bankers looking for hints of price pressure.

Asian stocks wobbled on Tuesday as investors awaited developments in U.S. tax reform efforts, while contemplating if a marked flattening in the U.S. yield curve might ultimately be a harbinger of an economic slowdown there.

Congressional Republicans pushed ahead on Monday on a U.S. tax code overhaul as a Senate panel considered the issue, but risks lay ahead with major intraparty disputes unsettled and President Donald Trump returning soon from Asia as the debate heats up.

Prime Minister Theresa May's blueprint for Britain's exit from the European Union faces a crucial test starting on Tuesday, when lawmakers try to win concessions from a weakened leader on the government's legislation to sever ties.

Harmony Gold's Kusasalethu mine west of Johannesburg has been hit by a wildcat strike triggered by the sacking of six leaders of the AMCU union for their role in a violent stoppage earlier this year, a spokeswoman said on Monday.

Hedge funds and money managers raised their net long positions in COMEX gold and silver contracts in the week to Nov. 7, U.S. Commodity Futures Trading Commission (CFTC) data showed on Monday.

Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.04 percent to 843.39 tonnes on Monday.

(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Biju Dwarakanath)